"I would argue that the most serious threat to the United States is not someone hiding in a cave in Afghanistan or Pakistan but our own fiscal irresponsibility." David Walker, Former Comptroller General of the United States of America

18 March 2006

The “Threat” of Out Sourcing

"Life is a process of becoming, a combination of states we have to go through. Where people fail is that they wish to elect a state and remain in it. This is a kind of death." ~ Anais Nin

The term “out sourcing” creates very different responses depending on who you talk to. Out sourcing is a reality of today’s global economy. It is a phenomenon that we can not dismiss in favor of protectionism and isolationism. The world becomes more and more interconnected everyday. Thanks to the boom years in the 1990’s, thousands of miles of fiber optic cable have been laid and now countries like India and China are taking advantage of that infrastructure. Information can be shared faster and more efficiently than at any time in our history.

What does this mean for the United States and Europe (the “old” economies)? We have to change and “go with the flow” so to speak. We can be unrealistic like the French youth who look to the past and see the socialistic comforts their parents enjoyed, or we can face reality and change our attitudes and embrace the opportunities that lie ahead in the global economy.

I understand that this is something that is very difficult for many people to accept; particularly those that have lost jobs due to out sourcing. Economies change, and with that change come hardships. Our economy in the United States has been changing over the last few decades from one based on manufacturing to one more reliant on information technology. U.S. companies are slowly adapting. And yes, there are growing pains.

But let us look at out sourcing more critically. Jobs are transferred from someone in the United States or Western Europe to countries where wages are less. This reduces operating costs for the companies (since the name of the game in the corporate world is “profit”). Share holders want returns on their investments. Unfortunately, these share holders and the stock markets in general have become greedy and even if a company meets the quarterly goals the stock can take a hit. That is the reality.

From a different perspective, the job that went to India, or elsewhere, provides an income for a family. That family’s standard of living has been raised. They can now afford more materialistic things. They may buy American made products, providing growth for American companies. The American companies may in turn expand their business and hire additional employees stateside.Okay, still not good enough for you? The worker in a foreign country has a job that provides for his family. That person is less likely to be embittered and join with extremists bent on violence.

A colleague of my wife’s was recently remarking that he was worried for his children because of all the jobs being “exported” to India and China. Upon hearing this, my initial response was that he should be worried; especially if his kids are not learning the skills they need to survive in the global economy. It seems that everyone is concerned, as well they should be. However, no job is certain. You would still have to compete with other Americans in a non-global economy. You still have to out shine your peers. Your peers today are just across the ocean or south of the equator."The dogmas of the quiet past are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew and act anew."~ Abraham Lincoln

Manufacturers of horse drawn buggies had to adapt with the advent of the automobile. We have to adapt to the changing economy by being better educated and better trained and more flexible. There are many opportunities out there for those Americans willing to adapt. It just requires work, something not many Americans are used to or willing to do.

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